diff --git a/src/cli/commands/daemon.js b/src/cli/commands/daemon.js
index acbbc5dc00..11fdba83ee 100644
--- a/src/cli/commands/daemon.js
+++ b/src/cli/commands/daemon.js
@@ -16,6 +16,11 @@ module.exports = {
     console.log('Initializing daemon...')
     httpAPI = new HttpAPI(process.env.IPFS_PATH)
     httpAPI.start((err) => {
+      if (err.code === 'ENOENT') {
+        console.log('Error: no ipfs repo found in ' + process.env.IPFS_PATH)
+        console.log('please run: jsipfs init')
+        process.exit(1)
+      }
       if (err) {
         throw err
       }
diff --git a/src/http-api/index.js b/src/http-api/index.js
index 469f584ef2..9cd866a5cb 100644
--- a/src/http-api/index.js
+++ b/src/http-api/index.js
@@ -25,11 +25,17 @@ exports = module.exports = function HttpApi (repo) {
     }
 
     this.ipfs = new IPFS(repo)
+    const repoPath = this.ipfs.repo.path()
+
+    try {
+      fs.statSync(repoPath)
+    } catch (err) {
+      return callback(err)
+    }
 
     console.log('Starting at %s', this.ipfs.repo.path())
 
     this.ipfs.load(() => {
-      const repoPath = this.ipfs.repo.path()
       const apiPath = path.join(repoPath, 'api')
 
       try {
diff --git a/test/cli/test-daemon.js b/test/cli/test-daemon.js
new file mode 100644
index 0000000000..e5a844f9a1
--- /dev/null
+++ b/test/cli/test-daemon.js
@@ -0,0 +1,28 @@
+/* eslint-env mocha */
+'use strict'
+
+const expect = require('chai').expect
+const clean = require('../utils/clean')
+const ipfsCmd = require('../utils/ipfs-exec')
+
+describe('daemon', function () {
+  let repoPath
+  let ipfs
+
+  beforeEach(() => {
+    repoPath = '/tmp/ipfs-test-' + Math.random().toString().substring(2, 8)
+    ipfs = ipfsCmd(repoPath)
+  })
+
+  afterEach(() => {
+    clean(repoPath)
+  })
+
+  it('gives error if user hasn\'t run init before', (done) => {
+    const expectedError = 'no ipfs repo found in ' + repoPath
+    ipfs('daemon').catch((err) => {
+      expect(err.stdout).to.have.string(expectedError)
+      done()
+    })
+  })
+})